By DAVID KLEPPER and MICHAEL R. SISAK
ALBANY, N.Y. (AP) — New York’s attorney general is looking to open a criminal investigation into whether Michael Cohen violated state tax law, a person familiar with the matter told The Associated Press on Thursday.
Attorney General Barbara Underwood has requested a criminal referral from the state tax department to investigate and potentially file charges against Cohen, according to the person, who spoke on the condition of anonymity because the person was not authorized to speak publicly.
Cohen’s lawyer, Lanny Davis, declined to comment on his client’s latest legal obstacle. The development was first reported by The New York Times.
Cohen, the former personal lawyer and “fixer” for Donald Trump, owes at least $1.4 million to the IRS after pleading guilty Tuesday to evading federal taxes. It’s unclear if he also misstated his income on state returns.
Cohen failed to report more than $4 million in income on his federal tax returns between 2012 and 2016, including $1.3 million from his taxi medallion holdings, according to court papers filed in connection with his plea.
New York’s attorney general must get a referral to open a criminal probe. Such requests are almost always granted.
Cohen was already in contact with state tax officials on another matter, personally calling them the same day he received a subpoena from state investigators looking into the Trump Foundation.
A state official confirmed the call, but would not divulge the details of the exchange, which came Wednesday just hours after Cohen received the subpoena. The official was not authorized to discuss the case publicly and spoke on condition of anonymity.
The AP first reported the existence of the subpoena on Wednesday. It was issued as part of the state’s ongoing investigation into Trump and the Trump Foundation to determine whether the Republican commander in chief or his charity broke state law or misstated their tax liabilities.
Cohen pleaded guilty in Manhattan federal court to campaign-finance violations and other charges, saying he and Trump arranged the payment of hush money to porn star Stormy Daniels and a former Playboy model to influence the election.
The subpoena was issued after Davis said on television that his client has information that would be of interest to investigators in Washington, as well as New York state.
If evidence of alleged crimes is found, the matter could be referred to Underwood, a Democrat, who could pursue criminal charges and seek the release of Trump’s tax returns. The state investigation is seen as a potential backstop to the federal probe by special counsel Robert Mueller, since state charges typically cannot be cleared by a presidential pardon.
A loophole in state law, however, could make it harder for state officials to pursue anyone pardoned by Trump. The state’s double jeopardy law, which protects people from repeat prosecutions for the same allegations, contains several exceptions allowing prosecutions to go ahead — but does not specifically list an exception allowing state prosecutors to move ahead with charges when a person has been pardoned for similar federal crimes.
Underwood and Democratic Gov. Andrew Cuomo have called on lawmakers to close the loophole. The Legislature is not scheduled to be back in Albany until January.
Cuomo told reporters on Thursday that he believes “it would be an impeachable offense” if Trump used his pardon power to prevent someone like Cohen from implicating him in a crime. He said state law must be clarified to ensure that “even if the president pardons someone, they can still be prosecuted in the state of New York.”
A spokeswoman did not immediately respond to questions about whether Cuomo would call a special session.
The state’s investigation follows Underwood’s lawsuit alleging Trump illegally tapped his Trump Foundation to settle legal disputes, help his campaign for president and pay for personal and business expenses, which included spending $10,000 on a portrait of himself.
The attorney general’s office is seeking $2.8 million in restitution and other unspecified penalties in its civil suit. It said that it had referred its findings to the IRS and the Federal Election Commission for possible further action.
Besides his work for Trump, Cohen spent years amassing yellow cab medallions, the hard-to-get licenses adorned to the hoods of taxis in New York and Chicago that were once worth a fortune, but whose values have plummeted in recent years due to competition from ride-hailing services like Uber and Lyft.
Many medallion owners who used them as collateral to borrow money are now in deep financial trouble, unable to pay back creditors.
Once such taxi magnate, Evgeny Freidman, nicknamed the “Taxi King” by New York’s tabloid newspapers, managed Cohen’s medallions for years even after he was charged by state prosecutors last summer with pocketing more than $5 million in taxes.
Freidman, who told a real estate publication last year the two men were so close that Cohen helped him name his eldest son, pleaded guilty in May to a single count of tax fraud. As part of the deal, Freidman agreed to cooperate in federal and state investigations, according to a person familiar with the matter.